Page 382 - Business Principles and Management

Chapter 14 • Implementing and Controlling

THE STEPS IN CONTROLLING FIGURE 14-4 The four functions of management
Controlling involves three basic steps: (1) establishing are directly related.
standards for each of the company’s goals, (2) measuring
and comparing performance against the established stan-
dards to see if performance met the goals, and (3) taking
corrective action when performance falls short of the
standards. controlling
Consider the following example. A business has a goal
to manufacture and deliver to a customer 1,000 made-to-
order blankets by a specific date. The standard is to pro- planning
duce 25 blankets each day for 40 consecutive days. During
the first 10 days, only 200 blankets are produced, or an
average of 20 blankets a day. Because production is 50
blankets below the standard—250 blankets in 10 days—
the managers must take action to increase production
during the remaining 30 days. The corrective action may
include scheduling overtime work or assigning more work- organizing
ers to the task. Even as they take action, the managers
should carefully study the manufacturing process to see implementing
why the standard that was originally set could not be met.
As another example, the manager of a shoe store
wants to make sure that new styles of shoes sell rapidly.
The standard is to sell 30 percent of all shoes in a new
style within one month. If the store sells only 20 percent,
the manager must take corrective action. The manager may choose to increase
the advertising for the shoes, give salespeople a higher commission for selling
that style, or mark down the price to sell more. The manager will also want to
use this information when planning purchases in the future.
In each example, the managers had to set a standard based on the work to
be accomplished. Then they compared performance against the standard to see
if the company’s goals could be met. Finally, if performance was not meeting the
standard, the managers had to determine how to correct the problem. Note that
in both examples the managers did not wait very long to begin measuring per-
formance. Controlling activities should be completed before the problem is too
big or too expensive to correct.

CHECKPOINT
What are the three basic steps in controlling?

Setting Standards

Managers establish standards in the planning stage. They need to set high but
achievable standards. Managers can determine reasonable standards by studying
the job, using their past experience, gathering industry information, and asking
for input from experienced workers. The standards become the means for judg-
ing success and for applying controls.

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